I was looking at a couple of charging ICs (BQ2002 for instance) and some of the fast charger ICs can charge up to 2A whilst running of a 5v supply. In this case charging a empty 1v NiMH cell means that 4v * 2A ~ 8w is being dissipated by the IC? Do they use some kind of internal buck converter to step the voltage down?
BQ2002 and similar ICs don't actually see the charging current path through them. They are just controllers, they don't regulate by themselves. They have an output (the CC pin) which is used to indirectly control the external, high-current passing element.
You can have a look to a reference design provided by TI. The CC output controls a LM317 which is used as the regulating element (where the thermal considerations indeed apply).
This way, you can have a much greater flexibility in your design (use whatever regulator you want, linear or switched, with whatever specs you need for your specific case).